NALP Report: Salaries Fall for Recent Law School Graduates

Am Law Daily, July 6, 2011

By Drew Combs

Lawyers a year out of law school have endured significantly less lucrative job prospects in comparison to those who graduated just a year earlier, according to the National Association for Law Placement.

The organization released a report on Tuesday showing that the median starting salary for 2010 law school graduates dropped 13 percent to $63,000 when compared to the class of 2009, while the mean starting salary fell nearly 10 percent to $84,111 in the same comparison. The decreases in median and mean salary figures amount to drops of $9,000 and $9,343, respectively.

And this latest NALP report adds to the gloomy picture that emerged from earlier findings. As we reported here last month, 2010 law school graduates faced the worst job market in 15 years with overall employment for lawyers nine months after graduation at 87.6 percent--the lowest level since 1996, when it was 87.4 percent.

"The overall picture is of a really challenging and really anemic entry-level employment market which is attributable to the economic slowdown the country went through," says James Leipold, NALP's executive director.

Much of the drop in overall salary figures for class of 2010 graduates can be attributed to the decline in starting salary figures for those who took jobs at law firms. According to the NALP salary report, the national median salary for class of 2010 graduates working at law firms fell 20 percent, from $130,000 to $104,000. (The median for 2010 graduates who took government and public interest positions was $52,000 and $42,900, respectively--the figures were virtually the same for class of 2009 graduates.)

The drop in overall salary figures isn't solely, or even primarily, due to law firms paying associates less money, but more the result of increasing scarcity of high-paying jobs at large law firms. According to the report, members of the class of 2010 who joined large law firms (those with more than 250 attorneys) decreased by seven percentage points when compared to the class of 2009, from 33 percent to 26 percent.

And the percentage of 2010 graduates, when compared to 2009, who started their careers at small firms increased, according to the report. Fifty-three percent of law firm jobs filled by graduates of the class of 2010 were at firms with 50 or fewer attorneys--that figure was seven percent higher than for class of 2009 graduates.

Few 2010 graduates who started at law firms actually make the median or mean salary figures, according to NALP. Instead, those figures mark a dividing line with a sizable gap on each side. Starting salaries at smaller firms tend to range from $40,000 to $65,000, while large firm salaries range from $145,000 to $160,000.

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"It is not the case that individual legal employers are paying lawyers less," Leipold says. "Each sector remained relatively consistent in terms of compensation figures. What happened is there were many, many fewer jobs at large firms and more jobs at smaller law firms."

Delia Swan, a Los Angeles-based legal recruiter at Swan Legal Search, sees this trend playing out each day as the offers by big law firms to lateral associate have become increasingly lucrative but the recruiting processes have become more selective. Swan says, "Some large firms are being very generous with their offers to lateral associates, especially in very competitive markets like Silicon Valley, but their recruiting processes are more rigorous than ever."

And it's not just lateral hires that law firms have been generous with. In January, The Am Law Daily wrote about several New York-based firms, including Sullivan & Cromwell, announcing spring bonuses (or what some firms have referred to as "special bonuses") for associates ranging from $2,500 to $20,000.

In the ensuing months, other national firms including Bingham, Mayer Brown, and Akin Gump Strauss Hauer & Feld announced similarly structured bonus payments. "Akin Gump wanted to reward our associates and counsel for a very productive 2010," says David Botter, firmwide hiring partner, "so we thought it was appropriate to give them spring bonuses and remain market competitive in terms of our compensation structure."

Increasingly, for law school graduates interested in making the most money, the goal will be to land at a large national firm like Akin Gump. The only problem: That is likely to become a more difficult feat in the years ahead.

Says Leipold, "The class of 2010 is at the leading edge of a trend in which less people secure jobs at big law firms."